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UAE Guide: What is VAT Audit in Dubai?

Audit, VAT in UAE
Steps to submit VAT return in UAE

After almost 2 year of VAT implementation in Dubai, it’s estimated that 95% of the total registrants have completed their 1 st tax year. It’s high time for them to get themselves prepared for VAT Audit. VAT audit is a detailed examination of records and books of accounts of your business. It is an examination by the FTA to assess the risk possessed by an individual or a
company. The said examination is done under the guidance of significant laws i.e. Dubai VAT law, Dubai Excise Tax Law. In short, government evaluates the financial viability of the business, in order to pay required tax amount to the government.

How to get prepared for VAT Tax Audit in Dubai, Abu Dhabi, Sharjah, UAE

It is highly advisable for all business entities to make their business ready for VAT audit in Dubai. Failing to, can cause them too much of financial burden in forms of fines and penalties. Below is the checklist:

  1. Adhering to the relevant tax laws.
  2. Tax is charged at standard-rate on all taxable supplies.
  3. Timely filing of its VAT returns in Dubai, UAE.
  4. To ensure that out of scope, exempt supplies are accounted properly.
  5. To ensure supplies on which Reverse charge are applicable are accounted properly.
  6. Claim proper input credits for supplies made.
  7. Proper records i.e. tax invoice, tax credit notes, Custom Bill of entries and Exits are maintained.

Documents required for VAT Audit in Dubai, Abu Dhabi, Sharjah, UAE

  1. Records of all supplies and Imports of Goods and Services.
  2. Tax Invoices and alternative documents related to purchases.
  3. Tax Credit Notes received and issued.
  4. Tax Invoices issued.
  5. Records of Goods and Services that have been disposed of or used for matters not related to Business, showing Taxes paid for the same.
  6. Records of Goods and Services purchased and for which the Input Tax in Dubai, UAE was not deducted.
  7. Records of exported Goods and Services.
  8. Records of adjustments or corrections made to accounts or Tax Invoices in Abu Dhabi, UAE.
  9. Details of Goods imported to the state along with Customs declarations and Supplier Invoices.
  10. Records of fixed asset or capital asset purchased and also amount of input VAT claimed.

Procedure: FTA VAT Audit in Dubai, Abu Dhabi, Sharjah, UAE

  1. The Audit can either be conducted at the premises of the business or the FTA may request that all necessary documentation be brought to its office or sent electronically.
  2. An Audit may include accessing and reviewing the financial records of the company both in the hard format as well as electronic form.
  3. The FTA may review the returns filed by an organisation and then proceed to determine if the returns are accurate.
  4. No reason need be given by the FTA for conducting an Audit in Dubai.
  5. The FTA gives notice of at least 5 days to a tax registered business prior to the Audit.
  6. The business have right to ask for the credentials of an Auditor such as a professional identification card.
  7. An Audit is usually performed only during the official working hours of the FTA.(there are few exceptional situation)
  8. On completion of the Audit, the FTA will issue a report indicating any violations observed and the penalties to be paid by the business if any.
  9. The FTA may also re-audit the business if it has grounds for suspicious
    activity.

Importance of VAT Audit in Dubai, Abu Dhabi, Sharjah, UAE

In order to prevent your company from falling under the prospect of non-compliance with VAT tax law in the UAE, it is better to perform a detailed tax audit review in your organization. Federal Tax Authority, FTA in UAE has a right to levy severe penalties, including prison sentences and other monetary penalties if a registrant is found guilty of non-compliance

A VAT Audit review targets’ main focus is to identify and remove the disparities in your organizational tax policies, procedures, and business functions as per UAE tax laws. The importance of tax audits cannot be neglected since it is one way to improve and strengthen the operational structure of the company.

Another point that increases the significance of the Tax Audit review is that it helps the company in understanding the causes of non-compliance and address them for the past and the future. It will help you in identifying the areas which require rectification while assuring the accuracy of taxes actually remitted. Federal Tax Authority has provided multiple options for taxpayers to rectify their mistakes before undertaking an assessment such as filing a Voluntary Disclosure or a Reconsideration form as the case requires.

How to respond to VAT Audit notice in Dubai, Abu Dhabi, Sharjah, UAE

All the businesses in UAE which are subject to VAT audit must facilitate and provide the required assistance/documentation to the tax auditor to carry out the audit in a smoother manner. On receiving the tax audit notice, the taxpayer must perform the following actions:

  • Relevant premises are accessible
  • Tax records such as books of accounts, Tax invoices, etc. are accessible for review
  • Relevant staff are present
  • Original copies of documents or invoices

How Aviaan Accounting can help you with VAT Audit in Dubai, Abu Dhabi, Sharjah, UAE

In UAE, it has been made mandatory for the registered individuals and businesses to comply with VAT laws issued by FTA and take necessary action to adhere to applicable regulations. During a routine business function, it might be difficult to look into every VAT compliance requirement and also to ensure their completeness too. As your VAT consultant in UAE, our professional accountants can provide guidance, support, execution, and resolution on all your challenges encountered which will be based on the provisions and guidelines issued by FTA. We can help you with VAT Audit in Dubai, Abu Dhabi, Sharjah, UAE in the following ways:

  • We manage taxable transactions
  • Advice on business processes
  • Ensure compliance with VAT laws and regulations
  • Review, identify and solve issues
  • Guidance and support for VAT by expert professionals.
  • Quality work assured with timely Support

For more information on this topic, please visit our Insights Section or Contact Us

For enquiries, call +971 5679 52590 / E-mail: info@aviaanaccounting.com

Related Articles:

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2.     UAE Guide: How to apply for VAT Registration in Dubai and Abu Dhabi?

3.     UAE Guide: How does VAT Regime work in Dubai?

4.     UAE Guide: How does VAT Return submission work in Dubai?

5.     UAE Guide: Duties and Eligibility for Tax Agent in Dubai

6.    UAE Guide: What are Steps to submit VAT return in Dubai?

7.     UAE Guide: What is Special VAT Refund in Dubai?

8.     UAE Guide: What is Impact of VAT on E-commerce Business in Dubai and Abu Dhabi?

9.     UAE Guide: How to Apply for VAT registration Number in Abu Dhabi and Dubai?

10.  UAE Guide: How to De-register your Firm under VAT in Dubai and Abu Dhabi?

11.  UAE Guide: What is FTA Audit File of VAT in Dubai?

12.  UAE Guide: What are the FTA Accredited VAT Accounting Software for Dubai?

13.  UAE Guide: What is Exports and Imports under VAT in Dubai?

14.  UAE Guide: What is Zero Rated and Exempt Supply Under VAT in Dubai and Abu Dhabi?

15.  UAE Guide: How to De-register from VAT in Dubai?

16.  UAE Guide: How to Claim Your VAT Refund in Dubai and Abu Dhabi?

17.  UAE Guide: What is Cabinet Decision No. 52 of 2019 by FTA for Abu Dhabi and Dubai?

18. UAE Guide: How to Generate Invoices under VAT Law in Abu Dhabi and Dubai?

19.  UAE Guide: What is the Provision of VAT refund for Business visitors in Dubai and Abu Dhabi?

20.  UAE Guide: What is Impact of VAT on Sale of Business in Dubai?

21.  UAE Guide: How to Amend VAT Details in Dubai and Abu Dhabi?

22.  UAE Guide: What are VAT Designated Zones in Dubai?

23.  UAE Guide: What is VAT on Telecommunication & Electronic Services in Dubai?

24.  UAE Guide: What is VAT on Financial Services & Islamic Finance Products in Dubai?

25.  UAE Guide: What is VAT on Real Estate Services in Dubai?

26.  UAE Guide: What is VAT on Education Services in Dubai?

27.  UAE Guide: What is Related Parties under VAT law in Dubai?

28.  UAE Guide: What is VAT Profit Margin Scheme in Dubai?

29.  UAE Guide: What is VAT Reverse Charge Mechanism in Dubai?

30.  UAE Guide: What is VAT Capital Assets Scheme in Dubai?

31.  UAE Guide: What is VAT on Healthcare in Dubai?

32.            UAE Guide: What is VAT Tax Group in Dubai?

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